SAN ANTONIO, Feb. 20, 2003 (PRIMEZONE) -- American Energy Production Inc. (OTCBB:AMEP) announced today the final notes for the purchase of the first oil and gas acquisition have been signed by American Energy Production Inc. American Energy Production Inc. has acquired all of the oil and gas properties of Proco Operating Co. Inc., including the oil and gas leases and related oil and gas production equipment. These oil and gas leases cover over 3,000-plus acres and have a long history of production from several producing horizons. The Marble Falls formation on this lease has proven recoverable oil reserves of 2,400,000 barrels of oil and 3 billion cubic feet of natural gas. Proco Operating Co. Inc. will become a wholly owned subsidiary of American Energy Production Inc.
American Energy Production Inc. has agreed to buy the Proco Operating properties with a convertible $2,000,000 note. The term of the convertible note will be five (5) years, with a 6% interest rate. In 2007 the convertible note will convert to Preferred Stock and then, at the Companies option the note and interest can be paid with cash or converted to Company common stock at a set price of $1.00 per share.
The oil and gas lease, which is the subject of the acquisition, has a blanket Barnett shale formation about 150 feet thick. The first project American Energy Production Inc. will undertake is a fracture stimulation of an existing oil or gas well in the Barnett Shale. The Company's success in a re-completion of an existing well in the Barnett Shale formation will add substantial natural gas reserves to the American Energy Production Inc. assets.
American Energy Production Inc. has found a third party investor that will pay the cost of the first re-completion in the Barnett Shale. The investor will receive 50% of the working interest in the first well and will have an option to participate in five more wells under the same arrangement.
Statements contained in this release, which are not historical facts, may be considered "forward-looking statements" are based on current expectations and the current economic environment. We caution the reader that such forward-looking statements are not guarantees of future performance. Unknown risk, uncertainties as well as other uncontrollable or unknown factors could cause actual results to materially differ from the result, performance, or expectations exposed or unknown factors could cause actual results to materially differ from the result, performance, or expectations exposed or implied by such forward-looking statements.